Legal Definitions - board of directors

In a corporation, the board of directors is a group of people chosen by the shareholders to make important decisions for the company. Their exact responsibilities are outlined in the company's articles of incorporation, but generally include:

• Choosing corporate officers
• Selling shares of the company
• Distributing dividends
• Responding to merger and takeover offers

The board has a fiduciary duty to act in the best interest of the shareholders, meaning they must make decisions that benefit the shareholders as a whole. Every public corporation is legally required to have a board of directors, while private companies may choose to have one.

Let's say you own shares in a company that makes smartphones. The board of directors for this company would be responsible for choosing the CEO and other top executives, deciding whether to sell more shares of the company to raise money, and determining how much of the company's profits should be paid out to shareholders as dividends. If another company wanted to buy your smartphone company, the board of directors would be the ones to decide whether to accept the offer or not.

Another example could be a private company that makes organic food products. Even though they are not legally required to have a board of directors, they may choose to elect one to help make important decisions about the company's future growth and direction.

These examples illustrate how the board of directors is responsible for making important decisions that affect the company and its shareholders. They have a duty to act in the best interest of the shareholders and ensure the company is successful in the long term.